Advice on subdivision land investment

[Elaine Hester]

I am strongly considering a new type of investment for me, which is land that is to be sold to a homebuilder. I would be partnering with others in this investment within an LLC. Each of us would have a percentage share in the net proceeds. The project managers who are putting the deals together have a long, solid history in residential land entitlement and mapping and they have shared the project particulars, costs, and projected profits. On one particular deal, we are looking at an annualized return of 35% based on a projected 18-month duration, which is more like the kind of return I've been holding out for.

I'm looking for anyone that wants to play devil's advocate and tell me what I should be looking out for or what I might be missing before going all in.

Thanks in advance!

[Jay Hinrichs]

Originally posted by @Priyanshu Adathakkar:

The developers might have covenants built into the title, find out if there are any and what they are. Also consider this, basically you are a partner in an enterprise, while also being an individual owner of a piece of the whole project. They are not only your partners but also your competitors and a decision taken by an individual partner might affect your investment. For example, if an individual owner decides to lower their rents or upgrade their units, you will be forced to do the same just to be on par! 35% on paper might look good, but is it really achievable? 

 I could be wrong but I suspect this is not a cash flow rental deal its an entitlement sell to a builder deal. so your concerns are not even close to germane but  I could be wrong of course I am many time.s